Purchasing a business is never a risk free transaction. Ensuring that you’ve obtained documented proof of certain things from the seller is essential to help protect you, the purchaser. Here are a few matters that you should insist the seller provide documentation of for further review by your attorney…
- The seller owns the business and its assets, and has full authority to sell the them.
- The assets being sold are free and clear of all security interests and liens.
- The assets being sold are in good working condition.
- The financial records of the business provided by the seller are true, accurate and correct.
- The sale of the assets will not contravene any rule, law or contract, and will not create an event of default under any document or obligation.
- The seller and the business are not subject to any claims, proceedings or lawsuits.
- The seller and the business are not in default under any contract with customers, suppliers or clients.
Another document that is essential to the purchase of a business is a well drafted asset purchase agreement. The seller should agree to pay or reimburse the purchaser for any damages, judgments or expenses (including reasonable attorney’s fees) incurred by the purchaser that result from any of the seller’s obligations with respect to the business that arise prior to closing, or that result from any breach of the seller’s representations. Asset purchase agreements will never be exactly the same, and each should properly document the things that are important to the purchaser.
About Oakstone Law, PL
Oakstone Law PL was founded by Bob Kleinknecht. A member of the Florida Family Trust Company Subcommittee, the Estate Tax & Trust Planning (ETTP) Committee and the Real Property, Probate & Trust Law (RPPTL) Section of the Florida Bar, Kleinknecht has 15 years’ experience.
Prior to founding Oakstone law, he spent more than eight years serving as a personal, in-house estate, tax and charitable planning attorney for a Forbes 400 family in New York and Florida. Before that he was an estate planning and estate settlement attorney with prominent firms in Boston and Washington, D.C. after beginning his career with a boutique firm in Naples, Florida.
Licensed in Florida and Massachusetts, Kleinknecht has developed a practice model that eliminates billing by the hour and offers a streamlined, customized client process supported by technology, security and a personal approach.